** FAZ - are banks going to new highs or off a cliff??
May.8 volume created millions of bagholders...consult the charts of JPM, WFC, BAC, C, MS, FITB, COF, RF...etc....you will see historical volumes, all of which are now underwater.
This was the government sanctioned pump, with "stress tests" as the story, and the pumping media bringing in the sheep to the slaughter. They are all now bagholders.
The story is gone, and so is the volume, which is now 1/3 to 1/10th of that day. It ran and played like any other penny stock pump and dump, only this may have been the biggest one in history.
Assuming GS is the PPT, and knowing it controls over 50% of all market trades, lets assume that GS pushed markets to their highs on May.8 (to S&P500 at 930), through a variety of gap ups, control over low-volume futures markets and CNBC, pre-market news leaks, etc.....
After a dip to the obvious "support" point of 880...a 2nd lower volume bagholder push was engineered over last 2 days to unload more shares, allow a few more banks (ie. BAC) to massively dilute...(GS upgrading BAC the night before anyone?)
I noticed they bought the markets up in a straight line to 918 and then pulled the plug with 30 mins to go...
My feeling is the following:
1. This creates a massive natural resistance at the May.8. peak, as all those who bought on May.8 are now bagholders.
2. GS will NOT bail those bagholders out. i.e they will not give them a chance to break even. It took a 2-month stress-test pump to get them to buy there, they will NOT let them sell at break even or profit.
3. GS will NOT allow massive short positions to be comfortably established at the expected S&P500 930 or 950 levels.
4. GS has time to establish massive short positions, while minimizing other shorts (as both bears and bulls still have their eyes in the sky, looking for that 930 or even 950 (MA200).
5. The plug is pulled at 918, and a new batch of bagholders in the 900-920 levels is created...and shorts are left scratching their heads and chasing back down to establish positions well under 900.
Its a win-win-win-win, if you're GS that is.
Now you have millions of retail LONGS that are very comfortable in their bagholder positions, thinking the MARKET CAN NEVER GO DOWN again...I've heard this twice today
Perhaps not tomorrow but in a few days I expect a massive drop south and relentless 5-10 day selling that will scare the living F@K out of every pompous retail long and draw in all the scared and crushed bears from the woodwork...
It will be GS driving the markets back down again, with CNBC's help and their "end of the world" squeeling...GS will of course be massively loaded with shorts...
....when a critical mass of bears is sucked in...they will ramp it back up again...but I suspect they will need to push the S&P sub 800 to achieve that...though not lower than 740 as it may be too hard to reverse at that point.
